Small ups and downs expected

China's solid economic fundamentals mean worries about a large rise or fall in the value of the yuan are unfounded

The yuan's exchange rate has witnessed an accumulated 3 percent depreciation in recent months, due to the overlapping influence of the quantitative easing withdrawal by the US Federal Reserve, China's ongoing economic structural adjustment and its economic deceleration.

Against this backdrop, the decision of China's central bank on March 15 to expand the range of the yuan's daily fluctuation against the dollar to 2 percent from 1 percent has further reinforced market expectations for its continuous depreciation. Worries have also grown that if the yuan is on a long-term depreciation trajectory, it will have an undesirable influence on China's economy.